What are the economic prospects of a post-Zuma South Africa?

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South Africa has seen its fair share of upset over the past year, culminating in the departure of Jacob Zuma from his post as president after numerous allegations of corruption. Economically, the country has been in dire straits for a number of years, and many see the departure of Zuma as a fresh start.

He has been replaced by Cyril Ramaphosa, a former businessman who has vowed to stamp out corruption in the political system. Here are some of the ways the economy might be affected by this major political change in the country.

The End of Junk Status?

The South African economy suffered a major blow last year when it was downgraded to junk status, meaning that foreign investment would be almost impossible to come by.

Much of the blame was apportioned to Jacob Zuma for the economic policies which led to South Africa’s economic woes, so it could be the case that fresh economic policies by Ramaphosa’s government will focus on achieving growth and investment with a new approach.

That being said, it will take time for junk status to be lifted, and the new president will have his work cut out if he wants to truly fix the economy for the long term.

Investor Confidence

One of the key areas which suffered as a result of the corruption allegations against Zuma was investor confidence. Since few legitimate investors would want to risk money on a corrupt and failing system, it is likely that many investors were reluctant to invest in South Africa’s businesses and markets.

Now that Ramaphosa has vowed to rid the country of corruption, this could well change, and foreign investors may now be looking for new investment opportunities which could arise in the coming months and years (such as bitcoin trading in South Africa, business startup ventures, resources).

Ramaphosa Rally

South Africa’s currency, the rand, had been enjoying a rally since Zuma’s departure and Ramaphosa’ swearing in as president. Nicknamed the Ramaphosa rally, the rise in value of the currency suggested that investors were positive about South Africa’s prospects and economy.

Whilst the rally as since showed signs of slowing, the fact that there was a rally shows just how welcome political and economic change are in South Africa, and how promising Ramaphosa’s presidency is currently looking.

Employment

One of South Africa’s greatest problems over the past years has been unemployment, which reached a 13 year high in 2017. If Ramaphosa manages to stimulate investment in the country, then there is sure to be a growth in jobs as businesses look to take positive steps towards growth and expansion.

This could greatly ease the political and economic problems which the country currently suffers from, and help the country secure further investment in the future.

Ultimately, it is too early to tell exactly how South Africa’s economy will perform in the coming years. Whilst Ramaphosa is a breath of fresh air after years of turmoil, it will likely take time for the economy to get back on its feet. That being said, the country’s prospects certainly seem to be improving, and it could well have already started the steady journey to recovery.

 

 

  AUTHOR
South Coast Herald

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